Controlling at the Deutsche Bundesbank - · PDF fileControlling at the Bundesbank ... Annual accounts, general ledger, quarterly statements, profit estimate, ... SAP FI C 12 Strategic

Controlling at the Deutsche Bundesbank

Christoph Stute, 28 - 29 March 2012

Controlling at the Bundesbank

Need for controlling at the Bundesbank?

• Bundesbank is a public institution; not profit-oriented

• Independent of government (operational, institutional,financial and personnel)

• Responsibilities, duties and functions are statutory

Christoph Stute Strategic Planning and Controlling at the D eutsche Bundesbank

2

• Responsibilities, duties and functions are statutory

• Bundesbank has to follow several legal acts

Bundesbank uses traditionally instruments, toassess and monitor staffing in all business areas

General opinion in the Bundesbank until the late 1980’s:

No need for controlling ! ?

Controlling at the Bundesbank

Need for controlling at the Bundesbank?

• Bundesbank as public institution has the obligation tofulfil its tasks and duties in an economical andefficient way (Federal Court of Auditors).

• Late 1980’s: Federal Court of Auditors demands to


3

• Late 1980’s: Federal Court of Auditors demands toimplement a standard cost account.

• In the view of declining financial resources in thepublic sector and the appeal for more efficiency inpublic institutions Bundesbank started to implementcontrolling functions!

Organisation chart of department “Controlling, accounting and organisation”

C 30Organisation-wide proceduresC 11

Cost accounting,profitability analysis

C 2-1Accounting procedures and

allocation of profits

C 1Corporate Controlling

C 2Accounting

C 3Organisation

C 20Annual accounts, general

ledger, quarterly statements,profit estimate, accounting

issues, standards and policy

C 10Operational comparison

and statistics

C 3-1/C 3-2Cross-functional tasks,RM principles/methods

C 31

C 30Organisation-wide proceduresC 11

Cost accounting,profitability analysis

C 2-1Accounting procedures and

allocation of profits

C 1Corporate Controlling

AndStrategic Planning

C 2Accounting

C 3Organisation

C 20Annual accounts, general

ledger, quarterly statements,profit estimate, accounting

issues, standards and policy

C 10Automated staff assessment

Operational statistics

C 3-1/C 3-2Cross-functional tasks,RM principles/methods

C 31


12 March 2012 4

C 13Coordination of ESCB

related activities, Corporate Governance

C 32In-house Consulting

C 33SAP integration and

Cross- functional projects

C 34Job evaluation

profitability analysisand budget C 21

Financial reporting and statements

(daily financial statement, weekly financial statement)

C 22SAP FI

C 12Strategicplanning

C 35Security, Crisis Management

Service centre “KoLei”Cost accounting data

processing

Service centre “Bu”Administrative + Asset

accounting, Master dataadministration

C 31Organisation Surveys

C 13Coordination of ESCB

related activities, Corporate Governance

C 32In-house Consulting

C 33SAP integration and

Cross- functional projects

C 34Job evaluation

profitability analysisand budget C 21

Financial reporting and statements

(daily financial statement, weekly financial statement)

C 22SAP FI

C 12Strategicplanning

C 35Security, Crisis Management

Service centre “KoLei”Cost accounting data

processing

Service centre “Bu”Administrative + Asset

accounting, Master dataadministration

C 31Organisation Surveys

Strategic instruments

Strategy development and review

1. Formulate a strategy for the Bundesbank as a whole, taking into account the results of the SWOT analyses; derive concrete strategic objectives and determine development targets; draw up a strategy map

2. Review the strategic parameters

Targeted measures analysis from a strategic point of view


SWOT analysis

Evaluate information about opportunities and threats as regards the Bundesbank (market developments, European developments, legislator activities) as well as strengths and weaknesses of the Bundesbank in individual business areas

point of view

Translate strategic objectives into concrete operational measures (prepare related decisions, evaluate business unit-specific policy considerations, implement strategic decisions of the Executive Board), viewed on an annual and multi-year basis

Cost accounting instruments (1/2)

Actual cost accounting

Provide information detailing which cost centres have spent funds on which kind of costs and investment (cost typesand cost centre accounting) and how much of the amount relating to service and support unit costs is to be borne by the departments (calculation of secondary costs) as well as a breakdown of costs by services rendered/products provided (cost unit accounting)


(cost unit accounting)

Revenue controlling

Cost accounting supplemented by the analysis and monitoring of proceeds or revenue arising in the business unit (≠ value factors, such as interest income), inter alia in order to calculate the cost coverage of the individual cost unit

Cost accounting instruments (2/2)

Assessment of staffing needs

Determine rendered or expected performance to support the staff planning process and to analyse deviations (target/actual analysis = statutory obligation), longer-term developments etc


Standard cost accounting, investment planning, budg eting

Set an upper limit for spending by the Bundesbank as a whole during one calendar year and break down intended deployment of resources by service unit. Create transparency with regard to target/actual deviations in the areas of human resource allocation, costs and investment

Organisational instruments

Assessment of cost-incurring measures and of depart mental projects

Prevent individual uneconomical or organisationally unnecessary measures

Process and organisational analyses


Process and organisational analyses

Ensure an efficient organisational and operational structure; determine staffing needs for the tasks to be fulfilled

Job evaluation

Evaluate and rank exisitng and new jobs

Strategic Planning at the Deutsche Bundesbank

Christoph Stute, 28 - 29 March 2012

S Y S T E M O F O V E R A L L O B J E C T I V E S

Objectives of business

area 1


area 2


area x

Vision/mission

Internal sources

General system of strategic planning


Planning

Implementation (of the plan)

Monitoring

Internal sourcesof information

External sources of information

The strategic management process

Contents (examples):

�Trends and scenarios

� Vision / mission /

� Values-oriented

� Mobilisation & change

� Business plan � Balanced

Strategicanalysis

Strategydevelopment

Strategyassessment/

selection

Strategy description/communi-

cation

Strategyembedding/controlling


scenarios�Market and

customer analysis�Analysis of

success factors and industry structures

�SWOT and portfolioanalysis

� Identification of the present situation

mission / values

� Identify overall objectives position

� Strategic target positions

� Drafting and development of business strategies

oriented assessment

� Cost-benefit analyses

� Cost-effectiveness calculations

� Qualitative assessments

change management

� Planning/budgeting

� MbO / agreeing objectives

� BSC monitoring & reporting

� Strategic learning

� Balanced scorecards

� Strategy maps� Strategy

conferences� Feedback

rounds� Leaflets,

posters & additional communications material

The strategy world

We want to …• … provide the stimulus for a

stability-oriented monetary policy

• … help to shape ESCB-wide

The world of operative

management

Sales, € thousandProduct/ Total, Compo-product Q1 Q2 Q3 Q4 year sition in? ?

Strategic objectives and operative management are often extremely difficult to unite


• … help to shape ESCB-wide processes

• … provide an efficient, customer-friendly infrastructure

• …reduce the share of overhead and support costs in overall costs

• ...

product Q1 Q2 Q3 Q4 year sition ingroup per centA 0 100 100 80 120 400 10%A 1 70 80 120 130 400 10%B 50 50 50 50 200 5%C 210 240 270 280 1,000 25%D 0 150 150 150 150 600 15%D 1 120 110 90 80 400 10%D 2 100 90 90 120 400 10%D 3 130 150 160 160 600 15%

? ?

The steps to overcome the wall between the strategic world and the world of operative management

Decision by the Executive Board

Refinement of strategic objectives

Analysis of the SWOT-results and determination of strat. objectives

Strategic evaluation based on SWOT analysis

1 2 43


Objectives of a central bank?!

Fulfilment ofFulfilment oftaskstasks


taskstasks

Risk mitigationRisk mitigationCost effectivenessCost effectiveness

• Mission Statement • Strategic Intents • Organisational Principles of the Eurosystem

Strategic business line planning

Goal and value planning

of the Eurosystem

Strategic

Bundesbank’s planning structure


• Strategic business line planning• Organisational planning

Operational controlling instruments• Cost accounting• Organisational analyses • Personnel assessment procedure

Strategicmanagement

of Bundesbank

Operational management of Bundesbank

Mission and Vision of the Eurosystem

Mission:

We, the Eurosystem - the European Central Bank and theNational Central Banks - are the euro area’s monetaryauthority with the primary objective to maintain price stabilityfor the common good.


for the common good.

Vision:

Acting also as a leading financial authority, we aim atsafeguarding financial stability and promoting Europeanfinancial integration.

Strategic intents of the Eurosystem

1st Strategic intent

Eurosystem as therecognised monetaryand financial authority

Accountability, credibility, trust and transparancy are of utmost importance

3rd Strategic intent

Strategic


Safeguarding financial stability and promoting European financial integration

Strengthen shared identity, clearly define roles and responsibilities, work effectively and efficiently

2nd Strategic intent 4th Strategic intent

Strategic

Intents

� Participation� Cooperation� Transparency and accountability� Distinguishing Eurosystem activities

Organisational principles for fulfilment of Eurosystem functions by all its members


� Distinguishing Eurosystem activities� Cohesion and unity� Exchange of resources� Effectiveness and efficiency in decision-making� Cost efficiency, measurement and methodology� Exploit synergies and avoid duplications

Deutsche Bundesbank

Safeguarding stability

Cashmanagement

Financial andmonetarysystem

Monetarypolicy

Bankingsupervision

Paymentsystems

Deutsche Bundesbank


Cashmanagement

Financial andmonetarysystem

Monetarypolicy

Bankingsupervision

Paymentsystems

Five core business areas


Stablefinancial and

monetarysystem

PRICESTABILITY

in the euro area

FunctioningofGerman creditand financial

servicesinstitutions

Security and efficiency of payment and

settlementsystems

Efficientcash

supply andinfrastructure

Research / economic policy analysis

International cooperation / membership in internation al bodies

Stablefinancial and

monetarysystem

PRICESTABILITY

in the euro area

Functioning ofGerman creditand financial

servicesinstitutions


settlementsystems

Efficientcash

supply andinfrastructure

Research / economic policy analysis

International cooperation / membership in internation al bodies

Second Strategy cycle 2008 – 2012: profile and conso lidationStrategy development process

Decision by Executive Board

Specifiyingoperat. objectives, activities and indicators

Analysis of SWOT-results and specification of strat. objectives

Strategic evaluation based on SWOT analysis

� SWOT-workshops with all 14

� High-level work-shops to analyse

� Specifying operational

� Executive Board

1 2 43


with all 14 departments

� Information gathering

shops to analyse the SWOT-results, determine strategic intents and objectives, arrange objectives in strategy map

operational objectives

� Working out strategic activities as well as indicators to controll the implementation of the strategy

Board discussions and decisions

�What are the major results ?

Stärken(Strengths)

Stärken(Strengths)

Schwächen(Weaknesses)Schwächen

(Weaknesses)InternePerspektive

Risiken(Threats)Risiken

(Threats)Chancen

(Opportunities)Chancen

(Opportunities)ExternePerspektive

Analyse der

Jene wenigen entscheidenden

Themen, von denen der Erfolg der

Strategie abhängt

Hat das Thema einen entscheidenden Einfluss

auf den langfristigen Erfolg der Bundesbank?

Strategische Relevanzfür die Gesamtbank




Results of the SWOT-Analysis


�What should be done during the next fiveyears to get the bank on the „right way“ ?

Strategie abhängt

Sind überdurchschnittliche Anstrengungen notwendig, um hier etwas zu bewegen, gegen Widerstände durchzusetzen bzw. zu verteidigen?

Strategischer HandlungsbedarfSind überdurchschnittliche Anstrengungen notwendig, um hier etwas zu bewegen, gegen Widerstände durchzusetzen bzw. zu verteidigen?Sind überdurchschnittliche Anstrengungen notwendig, um hier etwas zu bewegen, gegen Widerstände durchzusetzen bzw. zu verteidigen?

Strategischer Handlungsbedarf

Strategy map of the Bundesbank


Add

ress

ees

Systematically reinforce influence at international levels

Pro

cess

es

Efficient cash supply and

infrastructure

Price stability in the euro

area

Stability and functioning of credit and financial services

institutions in Germany


settlement systems

Stable financial and monetary

system

Network Tailor supply of

Communicate clearly internally and externally

Publicly comment on economic

topics


Fin

ance

sP

roce

sses

Ensure targeted resource management

Pot

entia

litie

s

Continuouslycombat

bureaucracy

Network knowledge Bank-

wide to exploit synergies

Optimise operational

cost-efficiency

Intensify research and

analysis

Tailor supply of services more

closely to demand

Offer attractive, performance-

oriented employment conditions

Embrace and actively manage change

process

Foster adequate pool of

knowledge and know-how

� Specifying “operational objectives” –these are subordinated objectives which describe the means to achieve a main

Stärken(Strengths)

Stärken(Strengths)

Schwächen(Weaknesses)Schwächen

(Weaknesses)InternePerspektive

Risiken(Threats)Risiken

(Threats)Chancen

(Opportunities)Chancen

(Opportunities)ExternePerspektive

Analyse der

Jene wenigen entscheidenden

Themen, von denen der Erfolg der

Strategie abhängt







Refining strategic objectives


describe the means to achieve a main objective.

� Strategy takes a step forward becoming real.

Strategie abhängt

Sind überdurchschnittliche Anstrengungen notwendig, um hier etwas zu bewegen, gegen Widerstände durchzusetzen bzw. zu verteidigen?

Strategischer HandlungsbedarfSind überdurchschnittliche Anstrengungen notwendig, um hier etwas zu bewegen, gegen Widerstände durchzusetzen bzw. zu verteidigen?Sind überdurchschnittliche Anstrengungen notwendig, um hier etwas zu bewegen, gegen Widerstände durchzusetzen bzw. zu verteidigen?

Strategischer Handlungsbedarf


Add

ress

ees

Fina

nce

Pro

cess

es

Cash Management

Pot

entia

ls

Monetary policy Banking supervision

Cashless payments

Financial and monetary system


Add

ress

ees

Fina

nce

Pro

cess

es

Cash Management

Pot

entia

ls

Monetary policy Banking supervision

Cashless payments

Financial and monetary system

Specify measures/ tasks/ activities to achieve the objectives

Compilation of previous results in „objective sheets“

Name of objective

description of the objective

operational objectives

current measures / tasks / activities to


current measures / tasks / activities toachieve the strategic objective

new measures / tasks / activities

indicators

Strategy 2012

Guiding ideas

�raising the Bank ´́́́s profile

Guiding ideas of new strategy


�raising the Bank ´́́́s profile

�continuing the consolidation process

The aim is…… „to raise the Bundesbank’s profile as a stability-oriented, independentinstitution both in Germany and within the European System of CentralBanks.“ (annual report)

Core business area “operational objectives”

Monetary Policy � Intensifying research in monetary policy

� Conducting more operational tasks for ESCB in relevant business areas

Financial and Monetary System � Intensifying economic research

Refining strategic objectives – Examples for further oper. objectives

Strategy development… raising the bank’ s profile


� High profile in international academic debates

Banking Supervision � Extending analysis instruments (eg stress testing)

� Further development of regulatory framework

Payment Systems � Promoting European integration process

� Leading position in liquidity provision and transfe r

Cash Management � Bundesbank will remain in cash cycle

� Bundesbank strives for a 50% share in banknote processing

� Promoting ESCB recycling framework

Refining strategic objectives – further decisions on “operational objectives” by the Executive Board

� Staff reduced to 9,000 employees by end-2012

Strategy development… continuing the consolidation process


� Staff reduced to 9,000 employees by end-2012

� Further consolidation of branch network between 2012

and 2015.

• Safeguarding attractive conditions of employment

14.81714.346

13.19412.13311.50210.97210.391 9.822 9.560 9.000

15.000

20.000

Number of core staff (excluding trainees)

9.743

… continuing the consolidation process


10.391 9.822 9.560 9.000

0

5.000

10.000

End of2001

End of2002

End of2003

End of2004

End of2005

End of2006

End of2007

End of 2009

End of 2010

End of 2011

Target end of2012

9.743

How to review the implementation status of the strategic objectives

2. Did the implemented measures achieve their strategic goals? Assessment could be supported

1. Have all planed measures started / been implemented? If not, why?


strategic goals? Assessment could be supported with indicators.

3. Are there any conclusions about changes of the external or internal conditions that make it necessary to adjust the strategy?

Traffic light approach

Assessment of current status:

•Green – Development according to plan; No need for

How do you assess the status of the sub-objective? Justify your assessment by answering the following three questions. Traffic light


•Green – Development according to plan; No need for action

•Yellow – Development needs monitoring, potential need for adjustments

•Red – Decision of the Executive Board is required

Assessments of the sub-objectives are used to define the overall status of the strategic objective


February/MarchBudget/performance analysis for preceding period

August – DecemberOperational planning

Integration of strategic and

Connecting the strategy with the operational management systems


period Operational planning for forthcoming year (incl. planning of needed financial and personnel resources)

strategic and operational

management in annual

planning process

April - JuneStrategy-Review: Evaluation of success of defined operational measures regarding strategic goals, if necessary strategy update

Thank you for your attention.


Please feel free to ask any questions!

Documents

Controlling at the Deutsche Bundesbank - · PDF fileControlling at the Bundesbank ... Annual accounts, general ledger, quarterly statements, profit estimate, ... SAP FI C 12 Strategic